Amplify launches junior gold
miners ETF with modified weighting approach
Dec
2nd, 2020
The
Amplify Pure Junior Gold Miners ETF (JGLD US) has listed on NYSE Arca and comes
with an expense ratio of 0.49%.The fund is linked to the EQM Pure Junior Gold
Miners Index which, according to index provider EQM Indexes, has been designed
to provide “improved pure-play access” to the small-cap gold mining segment by
targeting metrics such as production levels rather than market cap.The
methodology identifies two categories of gold mining companies: gold producers and
exploratory gold producers.Gold producers are defined as firms that derive at
least 75% of their revenue from the sale of gold or through gold royalty
agreements. To focus on the junior segment of the market, only gold producers
that mine less than 1 million troy ounces of gold per year, or receive
royalties equivalent to under 1 million troy ounces of gold per year, are
included.
Exploratory
gold producers are defined as firms in pre-production that attribute at least
75% of their surveyed deposits to gold. According to EQM Indexes, by including
exploratory companies, the index leverages the gold mining segment’s future
operating potential, a feature that is typically not present in traditional
gold mining indices.Any gold producer or exploratory gold producer with a
market capitalization below $100 million or an average daily trading volume
less than $1m is not eligible for inclusion.The weight of each category is set
to equal the aggregate market capitalization of constituents within that group
while capping the weight of the exploratory gold producer category at 15%.
Within each category, stocks are equally weighted, subject to liquidity
constraints, allowing the index to diversify its performance more broadly
across all constituents.
The
index is reconstituted and rebalanced semi-annually with buffer rules helping
to limit unnecessary turnover.As of 30 November, there are 60 stocks in the
index which is primarily exposed to Canadian companies, accounting for 56.3% of
the index weight, with a further 26.4% in Australian-domiciled firms. The
remaining 17.3% is spread across eight countries.Christian Magoon, CEO of
Amplify ETFs, commented, “As investors increasingly allocate to gold in the
current market environment, we believe the capital appreciation and
diversification potential of small- and mid-cap gold and exploratory gold
producers can’t be ignored. JGLD provides investors with cost-efficient and
pure exposure to this market segment by implementing production and revenue
tests that other gold stock ETFs might lack.”The fund will compete against the
$5.9 billion VanEck Vectors Junior Gold Miners ETF (GDXJ US), the world’s
largest junior gold mining ETF. GDXJ comes with an expense ratio of 0.53% and
tracks the MVIS Global Junior Gold Miners Index. The market-cap-weighted index
includes firms globally that derive, or intend to derive, at least 50% of their
revenue from the gold and silver mining industry.
Source:
https://www.etfstrategy.com/amplify
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